The Treaty of Amity

Foreign Business Regulation

Prior to conducting business in Thailand, Americans should be familiar with the restrictions on foreign businesses in Thailand. Important Thai business laws include:

The Alien Employment Act (Decree No. 322) - effective as of 1978, this Act requires non-Thais to obtain a work permit before engaging in any work activity. There are 39 restriction occupations, including accounting, engineering and legal professions. Foreign professionals in these fields sometimes work as consultants in conjunction with local counterparts. Currently, this act is under judicial review.

The Immigration Act of 1979 - grants Americans up to a 30-day visit in Thailand without a visa. For business visits of longer duration, the Immigration Department requires a non-immigrant visa, category B. The visa is valid for 90 days for a single entry of 180 days for multiple entries, and must be obtained before entering Thailand.

The Alien Business Law (ABL) - also known as the National Executive Announcement No. 281 of 1972, restricts business activity of aliens or non-Thais. "Alien" and "Alien Business" is defined as a natural person or juristic person without Thai Nationality. This includes a business at least one-half of the registered capital held by aliens. The three restricted categories are:

Category A:

is completely closed to foreigners (with a few exceptions exist); services such as accounting, law and architecture are notably included;

Category B:

is closed unless promoted by the Board of Investment and includes fishing, printing, tour agencies and other businesses;

Category C:

requires an Alien Business License, and includes retail, wholesale and others businesses. A full list of restricted industries can be provided upon request.

Existing restrictions on American investment:

Owning land;

Engaging in the business of inland communication;

Engaging in inland transportation and communication industries;

Engaging in fiduciary functions;

Engaging in banking involving depository functions;

Engaging in domestic trade in indigenous agricultural products;

Exploiting land or other natural resources

Some U.S. businesses continue to pursue joint ventures with Thai partners and permit them to have a majority stake because of their familiarity with the Thai economy and local regulations.

American companies are exempt from many of these restrictions under the U.S. Thai Treaty of Amity and Economic Relations of 1966.

The Treaty of Amity

The Treaty of Amity is a special economic relationship between the United States of America and the Kingdom of Thailand. The Treaty of Amity was signed on May 29, 1966 and secured two major trade advantages for the U.S. companies

The Treaty permits American companies to maintain a majority shareholding or to wholly own its company, branch office or representative office located in Thailand.

American companies receive national treatment, meaning U.S. firms may engage in business on the same basis as Thai companies, and are exempt from most of the restrictions on foreign investment imposed by the Alien Business Law of 1972.

Application Process

Step 1: Filing Document. The applicant obtains documents verifying that the company has been registered in compliance with Thai Law. (“Treaty Procedures”)

Step 2: Certification by Commercial Service (CS). Upon receipt of the preceding required documents the CS office then will certify to the Thai Department of Commercial Registration in the Ministry of Commerce that the applying business organization is an American owned and managed company and is therefore entitled to national treatment under the provisions of the Treaty. (“Request Form”)

Step 3: Application to Ministry of Commerce. After certification by the CS, original copies of all the above mentioned required documents, along with a completed application form, which may be obtained from the Department of Registration in the Thai Ministry of Commerce, must be given to the Thai Department of Commercial Registration in the Ministry of Commerce in order to fully register under the Treaty. (“Certification Fee”)

Note: Process takes about five weeks to complete.

Treaty of Amity FAQ

1. How long does it take to register for the Treaty of Amity?

It will take approximately 1 week to register with the US Commercial Service. After the US Commercial Service issues the certification document, it will take 2-3 weeks following an application submission to the Ministry of Commerce.

2. What does it cost to apply for registration under the Treaty of Amity?

note that as of December 19, 2011, our fee structure per one signature/document, is as follows:

US$80: For certification and legalization, paid by credit card. (Payment will have to be made online through a secure link that our office will provide.)

US$120: For certification and legalization, that requires 24-hour expedited processing. (The requests will be accommodated only when there is an authorized officer available, so please contact us to confirm that the request can be accommodated.)

standard timeframe for completing a certification service remains 3 – 5 business days, from the time payment is received and the original documents are furnished to us.

3. Where can I have my documents, including copies of passports, notarized? Are documents notarized in Thailand acceptable?

For a US business entity, documents must be notarized at a notary public in the USA.

For American citizens who reside in Thailand, passports must be notarized at the American Citizens Services section at the US Embassy in Bangkok or the US Consulate in Chiang Mai. Documents cannot be notarized by a Thai firm. For information regarding notary services, see: http://bangkok.usembassy.gov/service/notarial-services.html

4. Do Thai documents need to be notarized?

Thai documents do not have to be notarized or certified but they must be translated into English. All documents need to be valid at least six months.

5. What are business activities are restricted from American investment?

Engaging in the business of inland communication

Engaging in inland transportation and communication industries

Engaging in fiduciary functions

Engaging in banking involving depository functions

Engaging in domestic trade in indigenous agricultural products

Exploiting land or other natural resources

6. How to do qualified US companies or persons apply for protection under the Treaty of Amity?

To receive protection under the Treaty, qualified US companies or applying persons need to meet the following requirements:

1. The majority shareholder(s) must be an American citizen(s) or US businesses

2. The majority of the board of director(s) must be Thai or American.

Please note that the above requirement will apply to the parent company in the US in order to show proof of ownership at every level until the ultimate ownership.

7. What is meant by the term “ultimate ownership”?

The term “ultimate ownership” implies that the applicant needs to provide proof that the majority of owners and directors in the company at every level are US citizens.

The ultimate ownership must be one of three forms:

Individual

Public listed entity

Trust Fund

8. What if members of the Board of Directors are of a third nationality?

The Board of Directors must have a majority of Thai or American citizens on the board. Those of different nationalities must co-sign with a Thai or American director.

9. What are the benefits of registering under the Treaty of Amity?

This treaty allows US citizens and businesses to establish a company or branch office in Thailand. It allows American companies to own a majority of the shares and receive national treatment. That is, they may engage in business on the same basis as Thais, and are exempted from most of the restrictions on foreign investment imposed by the Foreign Business Act B.E. 2542 (1999) (http://www.dbd.go.th/mainsite/index.php?id=791&L=12 )

10. What if no one shareholder has held more than 51 percent of shares?

If no shareholder owns a majority (greater than 50 percent) of shares, a group of shareholders whose combined shares constitute a majority may constitute ultimate ownership. Each shareholder in this group must submit a notarized copy of their passport.

11. What if the majority shareholder is US business entity?

The applying company needs to provide a notarized affidavit, bylaws, and article of incorporation/association of the US business entity and a notarized copy of the American passport of the major shareholder(s) of that company in order to show proof of the business ownership.

12. Does the parent company need to be located in the US territories?

Yes. Otherwise, the applying company will be unqualified.

13. Is a US entity, which is a wholly-owned subsidiary of the third nationality entity, qualified to apply under the Treaty of Amity protection?

17. Where can I find the request form, steps, procedures, and documents required under the Treaty of Amity?

18. Can the benefits under the Treaty of Amity transfer?

Yes. The Treaty of Amity Company has to remain US majority shareholder and board of directors.

19. If the ownership has been transferred, does the company need to notify the US Commercial Service?

No. The company needs to update the list of shareholder at the Department of Business Development, Ministry of Commerce, and then submit the application to the US Commercial Service.

20. Is there a minimum capital registration requirement for registering business?

There are no limitations on registered share capital; in practice, a minimum of Bt3 million is advisable. If a company has an authorized and paid up capital of less than this amount, it could have difficulty in obtaining work permits for foreigners.